Harley-Davidson-owned electric motorcycle business to lose at least $115M this year

LiveWire Group, controlled by Harley-Davidson Inc., continues to generate tens millions of dollars in losses as it prepares for the delayed launch its new Del Mar Model -- and LiveWire's president stated that the company is on track with its plan.

LiveWire shares the same Milwaukee headquarters as Harley-Davidson and reported a 25% drop in revenue for its first three months ending March 31, down to $7.8million. LiveWire, NYSE: LVWR), also reported an operational loss of $24.9 millions compared to an operating profit of $15.7 million a previous year.

Harley-Davidson executives (NYSE: HOG), who are responsible for LiveWire, said that the EV unit would post an operating loss between $115 and $125 million in this year. Harley-Davidson holds over 90% of LiveWire's stock, which was spun off in September 2022.

LiveWire, the company that produces the Del Mar, announced in February that it would not be ready until the third quarter this year. LiveWire announced in February that it will ship between 750 and 2,000 Del Mars by 2023, compared to the previous guidance.

LiveWire's president Ryan Morrissey stated that the electric motorcycle industry is preparing for Del Mar production. LiveWire has a contract with Harley-Davidson for the production of electric motorcycles in Menomonee Fall and York, Pennsylvania.

Morrissey stated on the combined LiveWire-Harley-Davidson analyst call on April 27, 'LiveWire's intense focus is on the final stage of bringing the Del Mar to Europe and moving it into production.'

Morrissey stated that LiveWire executives were pleased with Del Mar's reception from 'both media and potential clients who are impressed by both the technology combined with the affordability of the price point'.

LiveWire One is already available from the EV company. It sold 63 units during the first quarter of this year, compared to 72 units a year earlier. The LiveWire One generated $1.3 million revenue in the first quarter, compared to $2.3 million the year before.

LiveWire Group generates more revenues by selling STACYC balance bikes. STACYC's first-quarter revenue was $6.3m, a 22% decrease, according to LiveWire. This is due to "channel partners of electric balance bikes adopting a more cautious approach to inventory as a response to the macroeconomic environment."

Harley-Davidson purchased California-based STACYC Inc. and began selling electric balance bicycles in 2019.

Gina Goetter, the departing chief financial officer of Harley-Davidson, cited a number of reasons for LiveWire’s continued losses. These included an increase in product development investments behind the Del Mar launch and increased operating expenses associated with setting up the new business.

LiveWire executives and Harley-Davidson executives stated that LiveWire had sufficient cash and liquidity of $236 millions as of March 31, and for the EV Unit's business in this year.

Morrissey responded to an analyst's question on whether LiveWire executives were confident that they could continue to fund business and product development at the present rate. He said, 'As long as we are looking at the future, it is important for us to continue the product development, and then to continue to grow the units.

Del Mar is the key to product development, according to Morrissey. It is "a very important strategic cornerstone" in the United States of America and Europe.

Morrissey stated that the economics of LiveWire will improve once the company grows its sales.

He said that even at the lower end of our guidance, we would still be burning cash at the same rate. We'll be within the parameters and on track.

According to a prospectus, LiveWire has a history with losses. It is also expected to continue to suffer losses for many years. Stocks of the company were trading at $7.49 Tuesday, compared to as high as $12.63 at the time the spinoff.